OCTOBER 16, 2000

Chevron and Texaco

THIS week should see the announcement that Chevron and Texaco are to merge their operations to create the fourth biggest oil-producing firm in the world behind Exxon/Mobil, Royal Dutch Shell and BP Amoco. The French company TotalFinaElf will have a higher market value but will have less output.

Texaco and Chevron are already partners in the Asian Pacific region as owners of Caltex. It will be interesting to see if the merger has any effect on the sponsorship policies of the two companies. Chevron owns the Gulf brand, a famous racing sponsor in sportscars and in the early days of the McLaren F1 team, while Texaco supported by Team Lotus and McLaren in the 1970s before deciding to back Ford Motor Company programs.

Texaco returned to F1 in 1997 with Stewart Grand Prix and is featured on the Jaguars. The merger will put pressure on European oil companies Eni and Repsol-YPF to find partners in the oil business. Eni and Repsol are both F1 sponsors: Eni through its Agip sponsorship of Benetton (which is expected to end shortly) and Repsol with Arrows.